B.C. and Alberta take pipeline fight to premiers' conference

The standoff between the premiers of B.C. and Alberta over the risks and revenues from the proposed Gateway pipeline project continues as provincial and territorial leaders gather in Halifax for their annual summit.

Speaking from the Council of the Federation meeting Wednesday morning, Clark pressed her position that B.C. needs to receive a high level of compensation for risks associated with the pipeline, or she will block the $5.5-billion project.

And she took aim again at Alberta Premier Alison Redford, who insists her province will not share revenue from the proposed Northern Gateway pipeline with B.C.

"Alberta needs to decide that they are going to sit down and start talking. Just start talking. Begin the conversation," Clark told CBC News on Wednesday morning.

"We get very little benefit and have bulk of the risk.... If they are not even willing to have a conversation, then the project stops here," she said.

Clark said she is willing to talk about all potential revenue sources, including royalties, taxes and company revenue, but maintained B.C. needs to get its "fair share" if the project is to get a green light from her government.

"There has to be a fair share for B.C. given we are taking on most of the environmental risk," said Clark. "Look at the whole pie and look at how B.C. can get its share."

Redford rejects sharing revenue

The 1,177-kilometre twin line is proposed to carry heavy oil from Alberta across a vast swath of pristine B.C. wilderness and First Nations territory to a port for shipment to Asia.

Concerns about risks that the line could rupture on land, or that oil could spill from tankers into the Pacific Ocean, have sparked widespread opposition in B.C. and prompted Clark's government to set out five conditions for its approval.

But Alberta Premier Alison Redford rejected the idea of cutting any sort of revenue sharing deal with B.C.

"We will not share royalties and I've seen nothing else proposed and would not be prepared to consider anything else at this time," Redford told reporters in Edmonton on Tuesday.

"We'll continue to protect the jurisdiction that we have over our energy resources."

Clark contends B.C. deserves compensation, saying the passage of crude is nothing like trucking grain or even piping natural gas through Alberta.

"Transport of heavy oil is a unique project with unique risks. There is nothing else in this country that poses the risk heavy oil does," said Clark.

"That means every single time that you have an economic project or a commercial project, there has to be a new negotiation of the balance sheet," she said. "It's not how Canada has worked, it's not how Canada has succeeded and I'm disappointed to hear the comments."

Clark's response is that Alberta must either work with her to rebalance the equation or B.C. won't buy in.

"I am going to fight for this," she said, noting many difficult conversations have unfolded across the country and eventually led to an agreement. "They don't involve opening up the constitution."

Meanwhile the federal government is standing up for the Gateway Project, but wouldn't wade into the interprovincial spat between B.C. and Alberta on the matter of profit-sharing around the proposal.

Calgary Conservative MP Michelle Rempel, the parliamentary secretary to the Minister of the Environment, says her government is enthusiastic about the proposal, given the economic opportunities it could bring for Canada, but would not speculate what would happen if the project were to fail its environmental review.

Royalty 'red herring'

One Canadian energy expert says the B.C. government should be pursuing Enbridge Inc. for a share of the economic bounty from its proposed Northern Gateway pipeline rather than engaging in a feud over revenue with Alberta.

Trying to collect cash from another government in exchange for the movement of goods has no precedent in Canada, according to Warren Mabee, policy director at Queen's Institute for Energy and Environmental Policy at Queen's University in Kingston, Ont.

"This is a case where the pipeline will be built and the stuff that's inside the pipeline belongs to the companies, not to the province," said Mabee.

Fiscal benefits can be derived without sharing royalties, he added.

"That's kind of a red herring," he said. "What B.C. needs to be concerning itself with now is what mechanism makes the most sense, and what's the appropriate rate and how would they do that?"

Mabee said talk of royalty sharing confuses the issue, and Clark's government would be better off examining possibilities such as a targeted tax.

He said a carefully calculated export or port tax could be levied from the oil company, for example, by asking a fee per barrel being moved through the terminal in Kitimat, B.C.

"They could tax different grades at different rates, they could provide tax breaks depending on the safety of the ships," he said, noting there's a number of options. "That's the type of tax that could be applied without any big issue."

$81 billion in tax revenue

Only 8.2 per cent of the Northern Gateway's projected $81-billion tax revenue would flow to B.C. over a 30-year period, according to research commissioned by the B.C. government.

That equates to $6.7 billion for B.C., while Ottawa is expected to receive $36 billion and Alberta would earn $32 billion.

Saskatchewan is expected to top the remainder of the provinces in terms of tax benefit, receiving about $4 billion.

The analysis was conducted by Wright Mansell Research Ltd., and accounts for a period between 2016 and 2046.

British Columbia's gross domestic product would get a boost of 17 per cent of $270 billion over that period, while the total employment benefit would be 25 per cent of the project, but mainly consist of short-term construction jobs.